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tv   Power Lunch  CNBC  May 2, 2013 1:00pm-2:01pm EDT

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of our halftime reports next wednesday and thursday. so warren has some work to do. "pow er "power" starts now. >> this is a special edition of power lench. in 30 minutes we will be live and exclusive with goldman sachs chairman and ceo. we're devoting the first part of this hour to this question. did the fed and central bankers in europe just extend this bull run for stocks and how can you profit from it? power lunch starts right now. >> indeed it does. hi, everybody. tiler is live at a key investment conference.
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>> sit a great day to be here. the investment company, that's the biggest group of mutual fund executives in the country. they're all going to need a lot of decision making we're going to hear, the only camera in the room room. >> they kicked the can down the road. the fed came out yesterday and they said they stand ready to increase, right? they took off the table the issue about possibly pulling
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back come the fall and they talked about they stand ready. so you see what happened in the market, right? today they take it all back. you can't fight the fed. you have got to stay with it. i think that's clear. >> traders are very worried that tomorrow is going to be well below expectations. and that comment yesterday that they can increase or reduce the pace of purchases is a reminder to the trading community. >> i think they set that up exactly. >> let me turn you to europe. jim cramer was on the air saying i think it is possible that europe may be bottoming out. bob, do you agree?
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>> they are moving from the mid 40s up towards 50, which would indicate to you if they are starting to move, they are starting to move positive. >> they are considering negative interest rates for banks. that's a way of telling banks stop parking money. >> do you think it's fuelling the bull run. will it continue? >> no question about it. the numbers are beginning to get a bit more positive. and indeed here in the u.s., numbers are getting more positive. but it is still being fuelled by the central government dollars. not only in the u.s. but now by
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droggy. if you keep throwing enough cash at that, it's going to rate. could it be sustained on its own? >> you want in. >> sure. i think what i am hearing is the kind of optimism that i have not heard in the past five years. effectively opening the locks and the water is pouring in. you can certainly say that there are still going to be losers in europe but there will be winners as well led by germany and they may begin to pull back from their own level as their economy slows. they may start to pump money
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into the economies. the united states market is going be one of the best places to be over the next half decade. >> we're not a great market, just better than the others that stink. the exit from the fed's zero interest rate will be treacherous, exiting too fast will crash the real economy.
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>> the real point is we don't have any idea other than it has supported things for a while. and yes it certainly seems it doesn't sound earth shattering for me. >> if they see the economy weakening, they will not say they are concerned about assets. they have already prepared the market. the fed is here and we're going to help this. >> talk about a bang moment. they say they can keep the interest rates low for a long
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period of time. >> you have a new book out called restoring our american dream. and mario was asked if he was the last man standing in europe. what was his answer to that? i'm going to to paraphrase. i have always said when a country attempts to balance a budget in the near term it's going to slow the economy even in the medium term as well.
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what do you do to mitigate that? >> this is the one of raising taxes. >> he went on to say a decline. and now they can cut spending and cut taxes. >> that remains to be seen, right? >> no question.
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>> they were cutting back on working because it wasn't worth it to do the increase their personal output because so much of it was being taken away. >> that's a horrible situation. thank you so much. i will see you again in just a little bit. current trade is up just about four, almost five% now.
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the shares opened at 1925 before rallying. and it will change its name to voya financial. >> intel up 18% since announced that he would step down and that was last november. better than expected results in europe as well. it hopes to break even in europe. where it has reported 13
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straight years of losses. you may recall the new gm went public at $33 a share. >> coming up next, the government's hunt for a whale. sac capital. bethany just wrote a new piece for vanity fair. lloyd is on. he's up in just about 18 minutes. before the break, check out these hitting an all time high. up 6.25% at 176.39. ombines invet management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.
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>> another insider trader getting time in the slammer. todd newman has been sentenced to 4.5 years in prison. he was convicted in december for insider trading offense. practically everybody elts f. it says any criminal sanctions brought against an analyst will lead to compensation call babs. we are banning contact with company employees that are not part of senior management or investor relations. that new policy pull out nearly $1.7 billion and it also comes ahead of a may 15th redemption deadline. and vanity fair has a big piece
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on the investigation. the hunt for steve cohen. she is live in chicago with us today. good to see you bethany. welcome back to "power lunch." let's start out with the letter. i know that sac has beefed up compliance as you point out well in your article. going from three emply es to better than 30 employees. >> well, i think it shows two things. i think that sac needs to placate investors. you have seen the nervousness that has been created by the government investigation. that's a lot of money to be pulled out of your hedge fund. but i also think you might read something else into it which is that he may end up escaping from this afterall. >> you know what? i think i just lost bethany's mic but we will work on that and get back to her as soon as we
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can. it's a terrific article worth reading. we're going to take a quick break. what about a new house? would you like one? what about a boat? in seattle, you can have both. the power house is coming up next. first, facebook up big. led by 4.5% on the day. [ lorenzo ] i'm lorenzo.
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i work for 47 different companies. well, technically i work for one. that company, the united states postal service® works for thousands of home businesses. because at® you can pay, print and have your packages picked up for free. i can even drop off free boxes. i wear a lot of hats. well, technically i wear one.
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the u.s. postal service®, no business too small. >> the rest of the trading and management. >> i agree with that. to say look, look at all the changes. you have caused us to make all of these changes.
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>> i think the closest thing they have got is the guy charged with the $276 million in insider trading profits for convincing cohen to go long and short ahead of a big announcement. the only thing that was said. there is definitely some speculation. >> instead he is saying not guilty. >> and he has changed attorneys. perhaps he is going to really fight this. >> there are a lot of mysteries
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still in this case. the fascinating thing to me is how many threads there are and how meticulous the government's investigation has been block by block, step by step. >> i love the way you ended that article. bethany, thank you very much for joining us. it's a terrific read. appreciate it. >> wild fires are burning near los angeles. and fire season doesn't even start until next month. it's the santa ana winds. and a may snowstorm dumping on states across the midwest. this video comes from minnesota where some parts of the state got some 14 inches of snow. certainly does not look like spring there. this week we're in beautiful seattle, washington.
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he is over 22 years of experience. welcome it's nice to have you there. >> the average list price about $750,000. 421 total pending units. it's always been a very competitive market, has it not? >> it has. we are on a very level playing field throughout the recession. a very short supply of inventory. it is a little misleading. it goes back about a month. >> you're seeing a lot of foreign money coming in.
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we do have a significant amount of chinese investment coming in. it really is a broad employment base. that's driving up prices.
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>> who wouldn't love to live on a houseboat? you're right there on the lake. i'm actually surprised it's not more than that. >> yes, well, actually, this is kind of the medium range that we're looking at right now. as you said it is on the lake. this is our houseboat type of living. it is a lifestyle. rick minor, this is his listing. it's a two bedroom, two and a half bath. you can actually moore your boat. it does have covered parking. you can literally take your boat and go to work. >> i hope some day to experience that lifestyle. it's not in my future we're
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calling it the power house of the week. and the address is 4005 east high land avenue. >> a lot of older homes that have been built, this would be ideal for an executive for microsoft. >> >> you're absolutely correct. oes sit on a very big lot. this is a beautiful house, good for the family. six bedrooms. it's more like a seven bedroom
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we have already got some interest already this morning before i got here. i'm expecting to get there pretty quick. >> thank you so much for joining us. >> it's an honor to be on the show. >> thank you. >> firefighters are up there battling flames. those are live pictures. fire season doesn't start until june but the santa ana winds have really whipped up well in advance of when they normally do. i'm going the send it down to you. >> the investment company institute meeting here in
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washington. the chicken caesar salad has been consumed. the cheesecake is in waiting. the ceo of goldman sachs will face some questions. all that and more after this break. from washington. tdd#: 1-800-345-2550 opportunities are waiting to be found in faraway places. tdd#: 1-800-345-2550 markets on the rise. tdd#: 1-800-345-2550 companies breaking through. tdd#: 1-800-345-2550 endless possibilities. tdd#5-2550 with schwab, i search the globe for the big movers. tdd#: 1-800-345-2550 i can trade in 30 different markets tdd#: 1-800-345-2550 to help me seize opportunities, tdd#: 1-800-345-2550 potentially better returns and new ways to diversify. tdd#: 1-800-345-2550 to get an edge, i use schwab's global research. tdd#: 1-800-345-2550 they give me equity ratings on foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, tdd#: 1-800-345-2550 momentum and risk. tdd#: 1-800-345-2550 i also have access to independent firms tdd#: 1-800-345-2550 like ned davis research and economist intelligence unit. tdd#: 1-800-345-2550 and with my schwab global account, tdd#: 1-800-345-2550 i can trade directly online in top markets tdd#: 1-800-345-2550 in their local currencies-- when the markets are open. tdd#: 1-800-345-2550 plus, their global specialists are on call around the clock. tdd#: 1-800-345-2550 there's a world of winners out there.
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>> good afternoon, everybody. we are live at the investment company annual conference. the biggest conclave of the mutual fund business. over my shoulder, the ceo of goldman sachs will face the membership here taking some cues from the chairman. >> look at the spread between
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our tens and their tens. it widened out about four basis points. >> thank you, rick. i'm going to turn it back down to ty because we're going to talk about gold prices right now. >> that's exactly right. prices closing for the day. we check in as we always do with sharon epperson. >> traders behind me are getting excited. up more than $21 right now.
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>> that is something the traders latched on to and looking at higher gold prices. and in etfs and in terms of the decline and holdings. what we saw in april was the largest on record. we're watching elsewhere some nice bump ups here in platinum and palladium prices. the report that traders are really waiting for is going to be the all important jobs data. tiler, over to you. >> all right. thank you very much. another day of multiyear highs at nasdaq. and for all the action there, let's go to seema. >> technology outperforming all the other sectors this week. that's the reason we're seeing the nasdaq trade at the new highs.
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signalling that it perhaps hit a floor around 396. aside from apple, it's bottom line was hurt. it still topped wall street consensus. that's why the stock hit a new 52 week high. they continue to deliver better than expected data. defines new ways to monetize mobile. but for that matter, so are some of the other recently listed social media names. tylor back over to you. >> i don't know whether you have the chart or the numbers close to you but what's the reaction to the news that there is going to be a new ceo and now we know who that individual is? >> i don't have the chart belast
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time i checked intel was seesawing. i think there was some speculation it seems like the street is getting what they expected. >> all right. thanks very much. we're going to check in there. hi, bob. >> traders in that sense that's when they do that permanent open market operations every day.
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>> home builders doing pretty well. we had a couple of decent earnings reports. beezer had a loss but said they would turn profitable. all the stocks are up nicely today. marriott raising room prices. notice some people were able to raise prices in the low growth environment. they also were raising policy prices as well. bottom line here is somebody is able to get price increases through in this environment. back to you. >> thank you very much. the cheesecake has hit the table and that can mean only one thing. lloyd blankfine is just minutes away from the annual meeting in
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washington. we will be back right after this.
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>> just a short while ago we showed you these live pictures from california, which is north of los angeles. and now authorities are -- basically saying that they need to have mandatory evacuations because the fire has moved rapidly down the hill and this is a very canyon-like area. just for the weather, for those of you not familiar we usually don't have santa ana winds at this point there is only 6% relative humidity. when you couple that with the high winds you can see the result. this is a very heavily populated
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area of different developments of tract homes and obviously you can see the fire coming right up against what looks like to be a highway. i don't know which highway it is certainly. authorities don't want to have that fire jump that highway. you can see all of that tract home development. it is the main route up into that area. you can see the police car moving up that highway. i would assume they have evacuated the area. it is quite unusual this time of year to have this type of brush fire activity. it usually occurs late in the summer, early in the fall when
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we get the high winds. i say we because we grew up in california. in that time period of august through september, october, it's coming very, very soon and that area is very, very dry. our thoughts go out to the residents who are watching this and hoping that that fire does not jump over that highway. just north of los angeles. the temperature there, 83 degrees. relative humidity is only 6%. an winds have been very, very high. and we're going to watch that situation very closely. ty, let's go down to washington. a difficult situation in california. but we're going to turn it over to you right now just for a few minutes as we wait for lloyd. >> thank you very much. i feel like i'm on the 18th
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green on augusta doing my jim impression he is paul shot stevens and is the president of the nation's largest trade group he is introducing mr. blankfein now. ushering in the most turbulent time not only in the history of that corporation but one of the most turbulent times in recent economic history. he has been a controversial figure and a lit of a lightning rod to criticisms of large banks, many of which including goldman sachs received some
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financial assistance. and now let's listen as paul shot stevens interviews lloyd blankfein. >> welcome. >> thank you for that. >> well, you know, it was reflecting on the luncheon today and remarking at ted's expression of our gratitude to jp morgan for sponsoring the lunch. it reflects a kinder gentler wall street that they would sponsor a lunch for the head of goldman sachs. [ laughter ] >> i know it's a big group. but no one tell jamie that i'm eating his lunch. it gets him very upset. so that's -- [ applause ]
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we will rely on the honor system. >> let's talk about the u.s. economy. >> it's a good place to start. with so much else the picture is pretty mixed. on the one hand, we have seen some improvements. that has got to be admitted. in addition, although unacceptably high, is at a four-year low. the housing market shows some signs of recovery. durable goods orders have been increasing. what are the indicators that you're watching most closely about its expectations for tomorrow? >> i think most people think that not without ris or try to.
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but i think we're going in the right direction. there is a lot of great factors. i can't really -- i can explain anything that has already happened but if you gave me the set of circumstances that the u.s. is living with now, so for example, housing having bottomed and actually going up and being a tail wind instead of a head wind. the energy position and what that does for manufacturing. the deleveraging that took place. the amount of cash on the sidelines. i would say this would be a terrific environment and i would project a much higher growth rate than what we're having. knowing what that is, i can look back and say that it was such a big trauma and there is still a lot of uncertainty and regulation. but it's really hard to explain. if you laid out these circumstances, i would say that the trajectory of growth would be a lot higher.
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people are nervous about taking risk. >> that's where we are today. these things are sentiment driven. economics. forget about economics. markets are not science, they are social science. a lot of sentiment and emotion. there are a lot of problems that are dogging us, but i think the world muddles through and the u.s. does better than muddle through because of all the advantages i described to you. >> i don't know if you saw the piece that bill mcnab had in the wall street journal. he is the chairman of vanguard and he talked about uncertainty.
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do you subscribe to that point of view? >> yes. but i don't remember a time when i couldn't have said that. in other words, i would say look, we came through a very dramatic period but a lot of that trauma has receded. if you set the circumstance to me, i would say this looks like other times when things were stronger. now other times didn't have the history and therefore not the reticence of sliding back or the fear and anxiety of making a mistake which seems to be quite much more consequential now.
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we have funding markets that have been easy. a rising equity market and not a lot of stuff is getting done. so i think there is uncertainty now. but i don't think spectacularly more than other periods that i have grown into, but the recent history is what is getting everybody nervous. >> and there are a lot of aftershocks, i suppose. >> i think that's a way of looking at it. >> so let's talk a little about monetary policy. kind of entered an unprecedented chapter in the federal reserves interventions, supplying the markets with an unprecedented amount of liquidity. not only are short term rates
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hovering. a program of quantitative easing. how effective do you think the feds' policy has been and are there other alternatives that we ought to be looking at. what are you most afraid of. i would be afraid of the economy sliding back. in some ways, psychological, we are in a deflationnary mind set.
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i just talked about the lack of activity. deflationnary period means you get up every day and you have something that you might want to do but instead of doing it you say i will wait for tomorrow because it will be cheaper. somehow it will get better tomorrow. and the next day you wake up and say i will wait for tomorrow and tomorrow and you string 20 years worth of tomorrows together if you're japan. inflation is insidious but you wake up every day. we're not seeing the signs of it now. but the kons defense kweconsequh more severe. if i were in charge of the tools that the fed is in charge of, i
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would be doing it too. i would also say when are the other guys going to kick in. once interest rates. however effective they were yesterday, the returns are deminnishing. that is going make people do something they were not going to do before. >> what period do you look to. >> thinking about it, we're looking for inflation everywhere. we grew up in an inflationary
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time. >> of course, big inflation. by the way, with big unemployment. you are going to have a school with double digit inflation with double digit unemployment. but the lesson that was passed on from my parents who grew up in the depression, they wouldn't spend a time ever. they grew up with the deflation of the depression. they weren't haunted that we are oh my god, everything you do is going to inflate the currency forever and ever. it is possible. we come from a thing where you can't contemplate that it's anything other than the fed's job to shield us from the inflation that will result from our self indulgent policies.
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because they didn't -- they were holding on to their money and savings accounts. things, sentiment changes and sometimes when it changes it takes memory and you don't remember what you used to think. >> it took world war ii to get us out of that cycle. >> i'm afraid there are other parallels. the late 70s is a parallel. i got out when times were bad. i worry now. i look out of the corner of my eye to the 94 period when you got accustomed to very lo interest rates. and a shocking and very large over a short period of time hike in interest rates that even though you think should have been expected really was
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stunning. if you want to think about what to worry about if you didn't have enough already. >> a large part of this meeting has been focusing on international issues. i would like to turn the attention outside of the united states, starting first with europe. i gather you have just returned from a trip to germany and to the united kingdom and you had opportunity to meet with policymakers in both countries. with that trip in mind what is your sense of developments in europe? have they desissively turned the corner in the euro zone crisis? or are we in yet another lull before yet another storm? >> i think the euro zone situation is going to be, you know, going to be a problem for a long time.
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having an interest rate policy that is appropriate for germany and spain. who would have thought that they could have the same x change rate for 15 years. it's a -- a difficult situation. but i think that one thing, you know, it is confusing for americans and less so for europeans. the willingness of europeans including germans who have to pay a lot of the bills to continue to pay those bills to support the european experiment,
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which is politically motivated. the political will to do that, is, i believe, absolute the german worker is not going to pay so much to support the greek. other than the fact that you try to keep the moral hazard out of it. i'm convinced that the support for making europe work, the alternative for which is you may not try again for another 100 years is very, very strong in these places where people talk to you. i think people should suspend their faculty about whether they
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will keep going along with the sacrifices that are necessary. i think the question do they lose the capacity to do it? or even if they can, unemployment in spain is so high that the social unrest which is a fear down the road. and how much tax if you want to make the economies converge, how much can you put on the last 50 or 40% of the people that are working in spain now they have a
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capacity for a very long time. they are focused on it. the federalist system there is very, very awkward. and very hard to get results. you can get into a situation where you might have the -- think about what the fed was doing during the financial crisis where there would be some crisis and a failure. a couple weeks later, t.a.r.p. two, capital injection. can that system be nimble enough?
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it's not resolved. you have to have growth into it. do you think our government does enough to support the europeans and coping with their, i think you called it the euro zone situation? i used the term crisis .
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>> there is that narrative. >> there were certain catalysts that were supplied through the mortgage crisis that a lot of it
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is european. but that feeling back and forth, i don't know how, you know, how receptive the europeans would be in their view to take instruction while they're working out their system. our folks are being supportive in concrete ways. by swapping and giving them dollars everybody thinks everybody is generous with his own advice. >> i have noticed that. >> and figures out how lucky the person is to get


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